Threatening UPS attacks are causing some companies to rethink supply chains

Kathryn Keeler and her husband, Stuart de Haaff, own an olive oil company in the hills of central California. The couple spend their days harvesting olives, bottling the oil, labeling the glass bottles and shipping them out, relying primarily on UPS to get their product to kitchens across the United States.

They are far from alone. UPS handles about a quarter of the packages shipped each day in the United States, according to the Pitney Bowes Parcel Shipping Index, many of them for small businesses like Ms. Keeler’s company, Rancho Azul y Oro.

But with the labor contract between UPS and 325,000 of its workers expiring at the end of the month and a potential strike looming, business owners around the country are facing what could be the latest in a series of supply chain disruptions they̵[ads1]7;ve faced since the start of the pandemic.

Some approach FedEx, the second largest private carrier in the United States, or the Postal Service in advance. Others call their third-party shippers — firms that work with the likes of UPS, FedEx and DHL to handle their customers’ shipping needs — to make sure their packages can still get to their final destinations even if there’s a strike.

The logistical challenge is just one more burden for businesses that have been stretched thin in recent years.

“Maybe a bigger business can handle those kinds of situations,” Keeler said. But as small business owners, she and her husband “don’t have a lot of extra time these days to be on the phone with the post office or FedEx.”

Since 2020, the pandemic has strained the global supply chain in a number of ways. E-commerce reached record levels as Americans stuck at home bought clothes, furniture, fitness equipment and groceries online. Companies had to navigate Covid-related shutdowns at factories in China and Vietnam. There were worldwide delays when a large container ship got stuck in the Suez Canal, causing containers to pile up at the Port of Los Angeles. These situations affected the way goods entered the United States.

A UPS strike could disrupt the way brands move their goods domestically.

“This is something that affects us on our home turf, and how do we solve it?” said Ron Robinson, CEO of BeautyStat Cosmetics, which uses UPS to ship its skin care products to retailers such as Ulta and Macy’s.

One strategy his team will lean on is to try to collect packages, sending as many as possible out at once, he said.

Switching to another operator is going to cost some companies.

Ryan Culver, CEO of Platterful, a monthly charcuterie board subscription service, also uses UPS. Switching to FedEx Express — necessary to ensure the meat in his packages reaches consumers on time — will cost about $5 to $10 more per delivery.

Teri Johnson, the founder of the Harlem Candle Company, received an email on June 26 from her third-party shipper about a potential UPS strike. It suggested she switch to FedEx. It will cost her about $2 extra for each candle shipped in the New York area. Shipping her candles to California will cost even more.

“We don’t really have a choice right now,” Johnson said.

FedEx said it is accepting additional volume for a limited time and will assess how much capacity the network can accommodate. “Shippers who are considering moving volume to FedEx, or are currently in discussions with the company about opening a new account, are encouraged to start shipping with FedEx now,” the company said in a post on its website Thursday.

The postal service said in an email that it “has a strong network and we have the capacity to deliver what is offered to us.”

Larger companies rely on sophisticated backup plans that have been tested over the past few years. The pandemic and previous tariff trade wars pushed many large retailers with global supply chains to diversify the countries where their suppliers are and the parcel carriers they use.

“We have been focused on investing in many transportation solutions that allow us to more easily move freight between carriers,” said Alexis DePree, head of supply chain at Nordstrom. “We can do it with much more flexibility and speed than we were able to do in the past.”

Some third-party carriers are seeing a boost in their businesses as the possibility of a UPS strike comes into focus for their customers. Stord, an Atlanta-based third-party logistics and technology provider whose clients include apparel manufacturers and consumer package companies, sent out emails to tell its customers not to worry. Stord uses a cloud-based platform to provide services such as warehousing and fulfillment and handles tens of thousands of their packages a day.

By combining the volume of its broad portfolio of customer brands and using software to make decisions, Stord has the ability to better negotiate prices with the major parcel carriers, said Sean Henry, the company’s CEO.

“We’ve negotiated with FedEx and USPS on rates around UPS so our customers don’t have to,” he said.

Stord said several of its customers had asked it to negotiate with carriers on their behalf. He said that equated to “tens of millions of dollars in annual revenue” for his business.

Still, some business owners aren’t letting the possibility of a UPS strike stress them out just yet.

Bill McHenry, president of Widgeteer, which sells cookware to major retailers, said he felt “kind of numb” after navigating the pandemic-related challenges. “I’ve seen a lot of things and the stories I’ve heard and things we’ve had to go through and survive — not just the prices, but the upheaval of thinking you have a container but not,” he said.

He said the potential rail strike last December had been a bigger concern for him.

Meanwhile, the possibility remains that an agreement could be reached between UPS and the union that represents its workers, the International Brotherhood of Teamsters. The trade union announced on Wednesday that the negotiations had broken down, after earlier saying that the parties had reached a preliminary agreement. If no agreement is reached, a strike may take place as early as August 1.

If that happens, “we would be collateral damage,” Keeler said.